In college, I struggled to maintain a budget and stay out of debt. I quickly found myself living paycheck to paycheck and racking up $20,000 of credit card debt. After some trial and error, I found a budgeting system that worked for me. Sticking with this system helped me pay off my debt in a year, and I started feeling confident about my finances.
In June 2020, I created a personal finance blog called The Avocado Toast Budget as a small side hustle to share what I had learned. A few months later, I began sharing my tips on TikTok, and The ATB quickly grew into a social media platform with nearly half a million followers. By April 2021, when I was pulling in about $4,000 a month through the side hustle, I quit my 9-to-5 to run The ATB full time.
I'm proud of the community and the company I've built, but it wasn't all smooth sailing. From December 2020 to April 2021, as I transitioned my side hustle to a full-time business, I learned some important lessons in managing finances, setting boundaries, and creating realistic expectations.
In the past, I had a pattern of investing thousands of dollars into new hobbies or side hustles, only for them to just not work out. This time, I knew I wanted to keep expenses low at first. I used my phone and natural lighting for photos and videos, and the only monthly expenses I had were for my website and domain, which cost me less than $30/month.
Keeping my costs to a minimum allowed me to quickly turn a profit and it ensured that my side hustle wasn't a financial liability. However, I was so focused on cutting costs that I ignored the potential benefits of splurging strategically on my business.
In July 2021, when The ATB grew to the point where I couldn't manage everything on my own, I decided to invest in a social media management team to help out. I could have made that decision months before I did, but I was overwhelmed trying to do everything myself, and in the end, the financial investment was well worth it, because it helped me reach more people.
As you are working toward taking your side hustle full time, be strategic about how you spend your money. I recommend keeping expenses low when you can, so you can splurge on things that help grow your business and free up your time.
When you have a side hustle you're passionate about, you likely dream of quitting your 9-to-5. But there's a giant leap between doing what you love on the side and generating some additional income and being able to completely financially depend on your business.
When crunching the numbers to decide if you should take your business full time, keep a few things in mind. Consider what expenses you have on the horizon and if your profits fluctuate throughout the year. My biggest tip is if your profits are more variable, err on the side of underestimating. It's better to be financially over prepared than underprepared.
I quit my 9-to-5 in April. Looking back, I could have quit in January of that year. Still, I'm glad I took a step back and waited until I had a solid emergency fund, set realistic goals, and was confident in my decision. I didn't want to put myself at financial risk by quitting before I was ready.
Video by Mariam Abdallah
When you're balancing a side hustle and a full-time gig, you're used to having multiple streams of income. And if you're not financially prepared, cutting out one of those streams of income can be a huge shock to your wallet. So you need that financial cushion.
Right before I quit my day job, I was making about $5,000 a month at my full-time job and paying myself around $4,000 a month through my side hustle. Even though The ATB was growing and I would have more time to devote to it, it still meant that I was taking a pay cut.
I was ready for that because I made sure I had enough money set aside to continue paying myself a steady salary for six months, even if my business didn't turn a profit. I didn't put in my two weeks' notice until I had that saved.
Video by Courtney Stith
It took me around five months to save up for my six month emergency fund. I was able to save as much money as possible by using a zero-based budget and tracking all of my expenses. With a zero-based budget, I gave every dollar I had a job and kept track of where my money was going. This allowed me to save and maximize every dollar to hit my emergency fund goal as fast as possible.
If you can, my best advice is set aside a little bit at a time to put toward an emergency fund that covers your expenses for about three to six months. I was glad I did. I ended up using part of my emergency fund when I had to take some unexpected time off work. I was still producing content but not at the same rate as I was before. My emergency fund helped to fill the gap in my income until I was able to return to my normal content schedule.
I had no idea how hard it would be to maintain a work-life balance as a business owner. Many of us dream of quitting our 9-to-5s so we can make our own hours and work when and how we want. But rather than working less, after I quit my day job I was constantly in work mode.
When you work for yourself, lines are easily blurred, especially if you work from home. I found myself answering emails at 2 a.m., and brainstorming content ideas at the dinner table.
I felt like I was never fully present in my work or personal life because I was trying to be present in both at the same time. This stifled my creativity and led to burnout. I found myself over the summer lacking the same passion I had for my business at the start, and I realized my lack of boundaries was contributing to the problem.
Now I'm a huge advocate for establishing healthy boundaries between work and personal life. This is important for your 9-to-5, but it's even more important for your side hustle and business. If you establish those boundaries early, they will become a habit as you transition to working for yourself and creating your own schedule.
For me, these boundaries include having an in-home office and filming room where all my work is done, not working from the living room or bedroom, and having a separate phone with my business email and social media. The physical separation helps to create a mental break between work and personal life. In the end, I'm able to be more creative and put more energy into my business because of these boundaries.
Since I share my personal financial goals, struggles, and triumphs with my audience, my business is rooted in who I am. So it was hard to separate my self-worth from my business, even when it was necessary.
There were times when rather than taking constructive criticism how it was intended, I viewed it as a personal attack, which made it difficult for me to use that criticism to improve my work. I also felt awkward during negotiations, because I was afraid to advocate for my worth and felt unsure of how to communicate that worth to other companies and potential collaborators.
Video by Tala Hadavi
I provided countless hours of free labor to family and friends, leading to an expectation that I was always available and shouldn't be compensated for my hard work.
It took me a while to learn how to separate myself from my work. But in talking to a friend over the summer, I realized that while I was great at helping other people figure out how they should ask for a raise or negotiate for their business, I found it hard to take my own advice.
So now I approach many aspects of my business as if I'm advocating for a co-worker, rather than myself. This allows me to be objective and fair, and also helps me implement feedback without taking it personally. Ultimately, as you transition from side hustler to full-time business owner, I have found that setting and maintaining these kinds of boundaries creates a foundation for success.
Lexa VanDamme, creator of The Avocado Toast Budget (The ATB), is passionate about making personal finance education accessible. The ATB's mission is to help millennials save, pay off debt, invest, and finally feel more confident with their money by providing accessible and relatable personal finance content on TikTok, Instagram, and YouTube.
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